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Best Debt House: Barclays |
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Also nominated: Deutsche Bank and JPMorgan |
This year more than any other, success in DCM has required both breadth and depth. With markets as jumpy and unpredictable as they have been, the best global debt house must not only have excellent global reach, it must also be product, tenor and currency agnostic. This year that house is Barclays.
Barclays and its shortlisted competitors dominate the DCM markets. But over the past 12 months the UK bank has been everywhere – among the top-three ranked underwriters across all FIG, SSA, US dollar, euro and sterling issuance. This focus on both domestic and cross-border business is underpinned by an enviable trading, distribution and research platform.
League-table strength is a given in this category, but a closer look at the business that Barclays has been writing gives an indication of the regard in which this team is held. In SSA, under the most challenging circumstances imaginable, the bank has excelled amid the storm. It is the number-one underwriter for EFSF and ESM issuance – quite a feat for an institution that is not even a eurozone bank. “There is no natural embedded advantage – we are thought of as a British bank not an indigenous eurozone bank,” says Charlie Berman, head of public-sector EMEA at Barclays. “These issuers want this team working with them on the tough deals.” The bank also underwrote the first benchmark issue for the Republic of Iceland since 2006. Its strength in volatile markets also saw it have 50% market share of corporate issuance in Europe in October 2011 – an extremely stressed time – and it has been instrumental in reopening peripheral markets in 2012. Deals such as those for Portugal’s Semapa and EDP required the kind of access to the domestic retail investor base that very few global banks have.
The past year has been a rollercoaster ride of risk-on, risk-off sentiment, so the ability to identify and exploit relevant and untapped investor bases is a crucial skill. Barclays demonstrated this in spades last year across FIG and corporate issuance. “Access is always about navigating windows, so you need to be with the bank that is in the flows,” says Mark Geller, head of FIG syndicate in London. In its top-tier US franchise it dominated in yankee bank issuance and US dollar covered bonds – key themes of the past year as some banks’ euro liquidity evaporated. This strength was in evidence on the corporate side as well, with yankee deals for BHP Billiton, Teva, GlaxoSmithKline, Tesco and Pernod Ricard among many others. Barclays’ Asian and emerging market yankee business included the underwriting of deals for Honda, Toyota, Brasil Telecom, Ipic and KNOC.
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“We have a pretty unique story. It has taken us a long time to get this franchise to where it is today”
Jim Glascott, head of global DCM at Barclays |
The bank’s strength in cross-border liquidity was also demonstrated as sole arranger of the groundbreaking ¥50.7 billion ($636.2 billion) Tokyo Pro-bond for ING Bank in April. It was ING’s debut benchmark bond offering in Japan. “This was an exceptionally important opening of previously trapped domestic liquidity,” says David Lyon, managing director IBD FIG EMEA. The theme of trapped liquidity was also addressed in the UK, with pioneering retail bond deals for National Grid and Tesco Bank. Barclays was also sole arranger for Lloyds Bank’s US retail notes programme, which enabled the bank to access US dollar funding away from the institutional market. “This was an important diversification for an entity like Lloyds,” says Lyon. In emerging markets the bank had success in opening new funding currencies with deals such as the debut SFr500 million ($520 million) issue for VEB and the £650 million ($1 billion) deal for Russian Railways.
Barclays’ US franchise is the bellwether of the entire firm and its strength was firmly in evidence this year. Its $13.3 billion sole underwrite on the bridge loan for Kinder Morgan’s acquisition of El Paso was the largest sole underwrite ever for a non-investment-grade credit and was done at the same time that other European banks did not even have access to the dollar market. When SABMiller was looking to refinance the $12.5 billion acquisition loan backing its acquisition of Foster’s it mandated Barclays for the preparation of the US 144a/RegS documentation, as an active bookrunner and as a billing and delivery bank.
One sector where Barclays has traditionally not been as strong as its closest competition is high yield, but the bank has made progress this year. “The engine behind the high-yield product has been the strength of our global distribution platform,” says Peder Oien, co-head of European leveraged finance. Barclays has increased its share of the US high-yield market from 4.4% in 2009 to 7.1% in 2011, and in Europe it has a 7.2% market share so far this year – up from 3.4% in 2009. “This has not been an easy market to be operating in,” says Oien. “It requires a lot of coordination and a unique set of skills.” The firm was on four of the five largest deals in the US over the past year – HCA, Sprint, CIT Group and Chrysler – and has brought 31 new issuers to the European market since 2010. “We have a pretty unique story,” says Jim Glascott, head of global DCM at Barclays. “It has taken us a long time to get this franchise to where it is today.”
